Monday, March 07, 2005

Social Security and black boxes.

There's an old joke that goes, "You know how, when a plane crashes, sometimes the only thing that's left is the black box? Well, why don't they just make the whole plane out of that same stuff? Huh?"

Which reminds me of a number of SS-related pro-privatization blogs and columns I've read lately, all claiming how investing money in private, market-driven accounts would absolutely provide a better rate of return than the stodgy, safe, conservative SS system that's in place now.

To such people, I have a simple question: If private accounts can generate a better rate of return, why not just move all of Social Security -- the whole thing, 100% of it -- into these private accounts, and give absolutely everyone the benefit of that better return?

5 comments:

Well, we are the big, noisy, angry neigbor to the south whose always telling everyone how great we are and how anyone who does anything different are stupid at best, and evil at worst.

Anyway...

Someone made a similar suggestion regarding the budget deficit. The US Gov't should put a few hundred billion $ of tax revenues in the stock market and use the returns to pay off the debt. They made it clear that they were joking too.

Have you ever noticed how many Canadian blogs are overly concered with all things USA'ian?Guilty as charged. My excuse is that I lived in the States for seven years up until 2002, so I'm still pretty interested in many things American.

Of course, my b-ball Blue Devils just lost to UNC so, at the moment, your entire country just freaking sucks!! Grrr ...

But then again, wouldn't the transition over to privitization be better helped with some of the spare cash from left over ss? I mean, for those people who are starting the private account late, there will have to be extra money for them, or the system, wouldn't be fair. For instance, a 20 year old person will have a much longer time to save up money for retirement than a 45 year old person. And we really shouldn't forget about that group.

And let's not forget the people over 50 who we would be robbing of retirement money completley were we to transfer all of the cash...

We also shouldn't forget that the money people male from their everyday job is what goes into the account, 4% of your yearly income to be exact, and that amount is plenty to build up a large nest egg. Except for those peope who I mentioned that won't be able to work that long before they retire.

Well, there are a few reasons not to move the entire ting into the private social security account.

As usual, sad to say, you're missing the point. The ubiquitous claim from pro-privatization wingnuts is that you will absolutely get a better return from private/personal accounts than you will from the standard SS investment scheme.

If that's true, then the obvious solution is to just shift the entire thing into those private accounts. Everybody wins. That's the claim.

You don't get to pick and choose which folks you want to transfer. The privatization scheme is being touted as a benefit for everyone. To say that privatization is going to work only if you let the right people set up private accounts is as meaningless as saying you can run a profitable health insurance company as long as you can exclude anyone who's sick. Or likely to get sick. Or might get sick. That's a worthless claim, but it's the one being made.

And if you really want to see some hilarious tap dancing, check out Mitch McConnell tap-tap-tapping away here. Some real entertainment value. (Note his claim that personal accounts are an "extraordinarily good investment," while he refuses to address how those accounts do anything to fix SS's long-term solvency. Tap tap tappity tap.)